Douglas Carswell's Blog

Economic reality check

Pundits will get a bit carried away over the next few days analysing the way the government is managing the economy.  One deft speech, journalists will be singing their praises.  An unfashionable turn the following week, the media pack will turn.

For a bit of perspective, however, don't look at what the pundits are saying.  See what the price of gold is telling us.

Firstly, gold prices denominated in Sterling have risen.  Or rather, our fiat currency is worthless than it ever has been.

Second, the collapse in the value of our currency, expressed in gold prices, has taken place largely since 2005 (about the time Gordon Brown was finally allowed to let rip?).

As the graph below shows, since about May this year, the surge in gold eased - but round about the summer (once QE2 began to look like a dead cert?) resumed. 

The pundits might miss it, but perhaps the markets suspect that the government intends to deal with the vast amount of public debt not so much by curbing spending (although it will), but by devaluing the worth of the £?  

Back to all posts